Tuesday, April 13, 2010

OEX May Positions

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options (the "ODD"). Copies of the ODD are available from your broker, by calling 1-888-OPTIONS, or from The Options Clearing Corporation, One North Wacker Drive, Suite 500, Chicago, Illinois 60606. Any strategies discussed, including examples using actual securities and price data, are strictly for illustrative and educational purposes. In order to simplify the computations, commissions, fees, and margin interest and taxes have not bee in included in the examples used in this presentation. These costs will impact the outcome of all stock and options transactions and must be considered prior to entering into any transactions. Investors should consult their tax advisor about any potential tax consequences. No statement within this presentation should be construed as a recommendation to buy or sell a security or to provide investment advice.

The following OEX options trades were executed to limit my overall risk exposure as well as give a wider chance of profit in May.

Closed 12 contracts April 525/520 Bull Put Spreads
Debit $0.10
Profit $0.20 per contract from the initial $0.30 credit received

Closed 6 contracts April 525/535 Bear Call Spreads
Debit $9.75

Open 4 May 510/520/530/540 Iron Condor
Credit $8.70

Effectively I closed 2 contracts of the Deep ITM April 525/535 Bear Call spread that was in danger of early exercise (for a loss) and rolled 4 contracts to May but up one strike.

My position breakevens for May expiration are now as follows:

Upper Breakeven: $538.65
Lower Breakeven: $511.31

This is my large mouse trap should the market sell off in May, but also limit my risk should the market continue its rise - random walk theory.

-- randomjaywalking

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